Frequently Asked Questions About Long-Term Care Insurance
We partnered with LTC Solutions, a long-term care insurance brokerage, to answer some of the most frequent questions concerning group policies that employers may offer.
Q: What types of policies are available? Are there plan design considerations employers or employees can make?
A: There are two types of products:
- Traditional long-term care
- Life insurance and a long-term care rider
Either product can be purchased as part of a group plan through an employer or individually.
Q: How much coverage is offered?
A: The benefit period depends on the terms of the contract. Common options are between two and six years or a lifetime unlimited policy.
Q: Who is eligible, and can employees sign up for this coverage at any age?
A: Generally, the employee and a spouse or domestic partner (18 and older) are eligible. The spouse/domestic partner may have to answer some questions, and their coverage is not guaranteed. The employee’s parents and minor children cannot be added to coverage.
It’s usually best to sign up at a younger age because rates are locked in at a lower price. An individual’s insurability (and need for care) can change at any time, and purchasing earlier ensures they can get coverage.
Q: Are most policies offered guaranteed issue?
A: When offered through a group plan, the carrier doesn’t require employees to fill out a medical form or go through underwriting. If they’re buying a policy after it was initially offered, the carrier may require them to fill out a health questionnaire. Employers should communicate to employees that the carrier may not offer guaranteed issue every year, or only offer guarantee issue to new hires. Individual plans are not offered guaranteed issue.
Q: What are premium rates based on?
A: Group rates are based on an individual’s age at issue and benefit amount. Individual rates are based on those factors as well as gender, with females paying more due to longer life expectancy. Additionally, tobacco status applies to some products.
Q: Who usually pays for the coverage?
A: It varies. There are three common approaches to payment:
- Offered on a voluntary basis, with employees paying premiums
- Employer pays for the policy—often, this is a base-level benefit for everyone, with employees able to pay for a more robust policy
- Employer pays for a percentage of the worker population to meet the participation requirement, which can range from 5% to 20% of the population. To meet this requirement, employers may opt to fund a base plan for employees who have been there for a certain number of years and offer it as a voluntary benefit for everyone else. If the participation requirement is not met, the carrier may decline to provide coverage.
Q: Do most group policies allow employees to take their policies with them (portability) if they leave the company?
A: Yes. Employees can continue paying the premiums on their own after they leave their employer. This allows them to pay the rates from their original issue age rather than forcing them to reapply at their current age or possibly not qualify due to newly developed health conditions. This is valuable coverage for someone who may have otherwise become uninsurable. There’s a small window in which they can fill out the paperwork to port coverage when leaving their employer, and inaction will result in a policy lapse. Employers must educate employees about the timeline and the implication of missing the window—potentially much higher rates if purchasing at an older age.
